Mark A Lemley, IP in a World without Scarcity (Pages 1-25)

Introduction:

1. Begins by noting the stage of technological advancement that we are presently at leave the
prospect of ending scarcity as we know it (something that will culminate in what Jeremy
Rifkin has called the zero marginal cost society)
a. Distribution information and other commodities on the internet are practically free
and the distributor has no contribution with the creator.
b. In the physical goods market too, 3D printers are promising that in the near future
we will be able to print all the commodities we need (extending to human organs and
rocket engines) at the cost of raw material and some electricity.
c. Artificial intelligence and robots might end scarcity of services too.
2. The above examples have two things in common:
a. While none of these technologies are nearly as far along as the Internet, they share
two essential characteristics with the Internet: they radically reduce the cost of
production and distribution of things,
b. they separate the informational content of those things (the design) from their
manufacture.
3. Role of IP: In its simplest form, IP law takes public goods that would otherwise be available
to all and artificially restricts their distribution. It makes ideas scarce because then we can
bring them into the economy and charge for them, and economics knows how to deal with
scarce things.
4. Problem 1: IP basically creates a false scarcity to monetize and incentivize inventions. With
respect to the internet, despite the desperate attempts to shut down content and a whole
bunch of legislation and law suits, content is distributed in total disregard for IP at an
exponentially increasing rate. It is only a matter of time that 3-D printing and AI also result
in a similar situation.
5. Problem 2: A lot of studies have also suggested that IP doesn’t really help innovation.
Empirical studies have proved that it is competition, as opposed to IP, that incentivizes the
creation of technology. In fact, with the advent of the internet, the amount of content being
created has drastically increased, despite the absence of IP, that suggests that there is no
need for IP and monetizing innovation is not necessary.
6. Bottomline: Any defence that of IP will eventually have to resort to an archaic world-view
where distribution was really expensive (when book printing was expensive and writing a
book was cheap and easy – the world without scarcity would be one where after the creation,
the distribution and production is instantaneous and cheap)
7. Summary of Premise: “Far from necessitating more IP protection, then, the development of
cost-reducing technologies may actually weaken the case for IP. If people are intrinsically
motivated to create, as they seem to be, the easier it is to create and distribute content, the
more content is likely to be available even in the absence of IP. And if the point of IP is to
 encourage either the creation or the distribution of that content, cost-reducing technologies
may actually mean we have less, not more, need for IP.”

Structure of Paper:

“In Part I, I discuss the traditional economics of scarcity and outline the new technologies that
are poised to create an economics of abundance. In Part II, I explore how IP will and should
react to those new technologies, using evidence from the Internet as an example. Finally, in Part
III I offer some speculations both as to what an economics of abundance would look like and
what role IP might play in such a world.

Part 1: Beyond Scarcity

A. The Traditional Economics of Goods and Information

1. Information is a public good: non-rivalrous consumption (more consumption does not
mean others cannot consume it, unlike ice cream or cake, for example). This, when coupled
with low marginal-costs to produce of distribute, some fear will result in the
underproduction of the commodity as such commodity would not make a profit.
2. Traditional Solution: RESTRICT ACCESSS – eg. Electric transmission lines, cables,
telephone services – entities that are exclusive mediums of communication. IP laws do the
same thing by creating a right of exclude others from competing with you and using that
exclusive market to recoup the fixed costs.
3. An IP right essentially treats information like it is a conventional commodity. It takes
information, that is a public good by nature and creates an artificial scarcity thus allowing the
IP holder to control the number of copies being made, control prices and monetize the
invention. This however leads to two inefficiencies:
a. Competition doesn’t moderate the prices .
b. Consumers end up paying more for it.
B. The Internet and Information Economics
1. Content Creation and Distribution Before the Internet:
a. An example: Take making a music record in the 70s. Writing a song was cheap (all you
needed was a Guitar). The production and distribution was a cost intensive endeavor
(recording companies, studios, production of records, promotion and transport,
retailing) and these intermediaries made about 80% of the revenue from the sale of the
records.
b. Furthermore even piracy was expensive. You still needed the physical infrastructure and
the logistical set-up like the record company to actually sell fake records.
2. The Internet Changes Things
a. Two important changes:
i. Separation of creation from the acts of production and reproduction. Eg. Under
traditional Copyright law, a “work” is different from its “copy”. Today the creation is
in the form of information (digitized) and thus there is no distinction between the
work and its copy as all of it is basically a bunch of binary codes.
 ii. Democratization of content distribution: anyone on the internet can upload/copy a
work.
b. This also makes piracy and counterfeiting really easy. All of these effects entirely topple
the economic premises that operate in the 1970’s record example.
3. The Coming Information Economics of Things
a. 3-D Printing:
i. People can now print almost anything using 3-D printers: from sculptures, to plastic
guns, to clothes, to kayaks, to functional electronic equipment and even other 3-D
printers.
ii. A future where 3-D printing is a lot more pervasive is imminent (much like what
computers looked like in the 70s). Such a future could see the economics of things
become much like the economy of information as we see it today. i.e. we just need a
device to access and freely consume all information.
iii. Such a world would call for the end of large scale manufacturing and things would
also not be scarce in the way we know it. Further, just like information, such an
economy of things would also become increasingly harder to control – has been
termed the “napsterization” of things.
iv. Whatever the internet did to copyright, the 3-D printer is likely to do with utility
patents.
b. Synthetic Biology and Bioprinting:
i. It is basically a process through with one can combine gene fragments of two
different species to create genetically modified organisms.
ii. It, in its most progressive version, could allow us to build a genome from the
ground-up to create new characteristics. [ some fascination insights – read it in your
free time]
iii. This would shatter the medical and pharmaceutical sectors by allowing to alter and
create genomes based on our specifications and demands.
iv. Biological patents and patents of hybrid crops etc will be entirely undermined.
c. Robotics:
i. Consequences of general purpose robots displacing human labour in the services
sector. [assuming this is self-evident]
ii. Machine learning and cloud updates for robots (driverless cars learn from each other
etc..)
iii. Such robots that can perform multiple functions with a high degree of adaptability
and efficiency will help robots break into the consument and retail-services market.

INFERENCE: Services Content, Things and Biologics, in the recent future will stop being scarce.

Part II will deal with what IP in such a world would look like.